This refers to the economic law that states that, all other things being equal, there is a direct relationship between the price of a good or service and the demand for it.
As the price of an item falls, generally the demand for it will rise. Similarly as the price rises demand will fall. Whilst this law holds true in many cases it is important to remember it applies ‘when all other things are equal’. For example demand for warm weather clothing typically rises as winter approaches irrespective of price changes, the price of a meal in a tourist destination is typically higher in the high season, a sudden hot spell may see quickly rising demand for fans at the same time as rising prices as suppliers exploit customer demand.
Law of demand is a term normally found in business economics, financial management and strategic planning;
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